National airline KLM has been fined €40,000 for failing to refund passengers who booked package holidays with bankrupt tour operator D-Reizen.

The airline told customers who made bookings between 2019 and 2021 that they would have to reclaim the full cost of their holiday from their travel agent after D-Reizen went out of business in April 2021.

The transport and environment inspectorate ILT said KLM was obliged to offered customers the option of their money back or an alternative flight, even if the original one was part of a package deal.

‘KLM must change its website and stop redirecting customers to their travel agency,’ the ILT said in its ruling.

The airline faces further penalties of up to €500,000 if it fails to comply with the order. KLM said it had refunded all the affected customers and it would appeal against the fine.

Cathay Pacific and Singapore Airlines were also fined €11,800 and €22,400 respectively for the same violation.